All posts tagged AOL

The activist investor lost a proxy fight yesterday and immediately started paring its stake, selling about $10.9 million worth of stock to bring its total holdings down to 4.9%, just below the level it would have to report on, according to a filing Friday.

AOL shareholders re-elected the AOL board at Thursday’s annual meeting. AOL immediately claimed victory with CEO Tim Armstrong declaring the vote a mandate for his vision for the company.

Shareholders have supported AOL management but apparently aren’t thinking the team can do much for value.

Bloomberg News

After voting in AOL’s current board, shareholders are now selling out of the stock. That’s a confusing message of both affirming the company’s strategy instead of activist investor Starboard Value’s plans, and worrying about the future.

Shares are off 7.1% to $25.18 in recent trading, its lowest price in over a month. The volume of shares that have been traded is more than double the daily average.

On CNBC, AOL CEO Tim Armstrong called the shareholder vote an “absolute underpinning of our strategy,” and dismissed the share price drop-off to “special situation” investors trading on the morning’s news.

It seems as if shareholders that thought Starboard could make drastic changes are bailing out. And for Starboard, it is a loss after a string of victories.

Tim Armstrong, the CEO of AOL says he expects to continue to partner with Yahoo, but that a transaction right now between the two is “probably not in the cards.”

Bloomberg

Armstrong spoke to Fox Business Network today at the National Cable Show in Boston and addressed talk that his aging Internet company might find a happy second-life with fellow aging-Internet giant Yahoo. It is a rumor that has been discussed multiple time over the years. Armstrong, though, wanted to tout the ability of both companies.

“I would say a couple of things: Yahoo, like AOL, is a big strong company with hundreds of millions of users. I think over the course of time, people have discounted the ability for the portals to kind of be a very good curator for people,” Armstrong said. “I would expect Yahoo to get healthier, AOL to get healthier and I think we are both going to compete for the future of consumer usage and advertising.”

The social networking giant is paying Microsoft $550 million for a majority of the patents that Microsoft bought a month ago from AOL for $1.1 billion.

That deal was seen as especially high in price, three times what some AOL analysts expected the patents to sell for, but now Microsoft has turned that around and earned half of its price back.

As a result of today’s agreement, Facebook will obtain ownership of approximately 650 AOL patents and patent applications, plus a license to the AOL patents and applications that Microsoft will purchase and own, the companies said in a release.

The purchase comes shortly after Facebook spent $1 billion to buy photo-sharing ap company Instagram, which has no revenue.

Facebook is currently embroiled in a patent lawsuit against Yahoo, following a suit Yahoo filed and a countersuit from Facebook.

“Today’s agreement with Microsoft represents an important acquisition for Facebook,” Ted Ullyot, Facebook’s general counsel, said in a release. “This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

UPDATE: This post has been updated to reflect Facebook’s Instagram purchase was more than a week ago.

AOL appeared to do exactly what activist investor Starboard wanted when it sold its patents to Microsoft for $1.1 billion, triple what some analysts expected. And Starboard is willing to give unto Caesar, “applauding” the board in a new letter and commending its actions.

But just because AOL did exactly what Starboard wanted and its shares are suddenly worth 43% more than they were last week, doesn’t mean Starboard is jumping ship. There is a still a little problem with the Display business, the unit that houses AOL’s content websites, in particular Patch, the hyper-local news network that has become the bane of Starboard’s existence.

AOL has all but pulled the Easter Bunny out of its proverbial aged top-hat

Bloomberg

The company’s shares are soaring on the back of its $1.1 billion patent sale to Microsoft

The patents had been up for sale and activist investor Starboard had been pushing them to be sold, but, as Benchmark analysts say today, the price AOL got wasn’t expected. Even though Starboard said it thought the patents could fetch $1 billion, that appears to have been taken as a long shot.

Benchmark said most of the Street viewed the patents as being work a maximum of $300 million.

That would mean AOL just pulled $7.63 per share out of thin air and is readying to hand it to investors. That correlates directly to today’s rise. Shares are up $8.12 each, or 44%, to $26.25 recently.

Benchmark boosts its target price to $28 from $18, an 85% boost.

Maybe for its next trick AOL may try to transport itself back to the year 1999.

AOL said Monday it would sell a portfolio of some 800 patents to Microsoft for $1.1 billion. The move comes a little over a month after an activist investor claimed AOL wasn’t being responsive to offers for the patents, even as AOL explored options for them.

AOL shares jumped premarket to 35% to $24.80 on the news.

In late February, Starboard Value LP, which owns 5.2% of AOL, urged a shakeup at the board. The hedge fund said it was disappointed with the performance of the company and its share price following several AOL investments in the likes of Patch and Moviefone.

Starboard urged the company to sell its some 800 patents, claiming it had had discussions with “several” interested buyers that thought the patent portfolio could be worth some $1 billion.

“Unfortunately, several of these parties have expressed severe frustration that AOL has been entirely unresponsive to their proposals regarding ways to take advantage of this underutilized asset,” Starboard wrote in a Feb. 24 letter accompanying its nomination of five board members.

Earlier today, Starboard Value moved to put five new members on the board of AOL, and the Internet company has now come back with a statement that it is doing fine already, and Starboard doesn’t have to be so activisty.

Bloomberg News

AOL: We’ve made changes like this.

In a statement just released, the once mighty AOL says it has made “significant” progress and just had the best performing year in five years.

And even while it is improving, it has held “several” meetings with Starboard, told them all of that and of plans to “simplify” its business. It has also offered Starboard an opportunity to “help shape” the board’s size and composition.

But Starboard has rejected the “productive” path for its loud clamoring, AOL says.

AOL CEO Tim Armstrong noted during a conference presentation Thursday that people “historically” look at his company as a dial-up

subscription provider. While AOL has been weaning itself from those dial-up days for years, he says AOL nonetheless still sees a future in subscriptions.

That is, subscriptions such as those sold through AOL’s Lifestore, which include computer-security software and a monthly installment of Suzanne Somers’ “Sexy Forever Program.” (For those of you younger than 30, Somers was on the seminal TV show “Three’s Company.” Look it up on YouTube, kids.)

Armstrong says, “In the future I think [people] will look at AOL for important subscription services.”

“Over the last two years AOL has significantly reduced costs, sold non-core assets, made significant investments for our future, and also recently repurchased over 10% of outstanding shares. AOL has a clear strategy and operational plan to provide our consumers and customers with exceptional value, which we believe will lead to the creation of shareholder value. Our Board and management team remain firmly committed to creating value for all shareholders and we will continue to aggressively execute on our strategy in 2012 as we continue the turnaround of AOL.”

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Dealpolitik is Ronald Barusch's strategic look at deals currently making the headlines as well as the major forces at work in the deal-making world. He was a M&A lawyer with Skadden, Arps, Slate, Meagher & Flom for over 30 years. He retired in 2010 after 25 years as a partner at the firm. Click here for his current and archived columns.